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The State of Maharashtra Vs. Hormusji Dinshaw Davierwala - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 357 of 1969
Judge
Reported in(1979)81BOMLR114
AppellantThe State of Maharashtra
RespondentHormusji Dinshaw Davierwala
DispositionAppeal allowed
Excerpt:
.....pratap the learned assistant government pleader, submitted that as the burden of proof lay on the claimant of the land in a reference under the land acquisition act, and the claimant failed to lead proper evidence with regard to the quantum of compensation, it would not be proper for the court to rely on the evidence led by the government and award compensation on the basis what the government expert estimated as the value of the dam. mehta by pointing that the evidence in the case has clearly established that the dam was constructed in the year 1938 and not in the year 1935 as assumed by mr. pratap must be rejected as it is against the well settled principles of valuation of such property. the subject to be valued being a building apart from the site the principle of fixing value by..........year to year, recourse is sometimes had to interest on capital value, or on the actual cost, of land and buildings, as a guide to the ascertainment of annual value.16. it is also observed in this authority that reference to the cost of construction was adopted for the purposes of the valuation of the indirectly productive portions of water and other utility undertakings. it is further observed that the principle of valuation has been used on occasion for the valuation of municipal property, such as a town hall, a fire station, a swimming pool, public conveniences, a crematorium by itself and with a cemetery, a teachers' training college, and an airport, of colleges and university buildings, public schools, a geological museum, an |old people's home, plant and machinery, football.....
Judgment:

Vaidya, J.

1. [His Lordship, after dealing with issues not relevant for the purposes of this report, continued.] Now the claimant has examined five persons including himself. In his deposition the claimant claimed to be the owner of the dam and .gave its history. According to him the dam was built in or about 1938 by his father, after taking possession of the site on February 8, 1938. It was only after the dam was constructed, to the satisfaction of the Collector the Government wrote a letter to the father of the claimant to execute an agreement and then the above agreement dated January 10, 1939 was executed. The claimant was paying the rent of 11 annas 3 pies for the space per year. His father had spent for the construction of the bridge. His father also spent for the repairs and maintenance of the dam which was meant exclusively for his family and family members, with whose permission, the other members of the village were using it. The neighbouring landlords were using it with his permission.

2. There was a gate to the bridge towards the village Vankas. If any one of them wanted to take the cart across the bridge they did so with the permission of the claimant's manager who refused the permission! if a cart load was heavy. He also said that the dam was used for the storage of the water which was useful for irrigation in the claimant's garden and irrigated land. He said that the water was used for irrigation with the help of pumps run by oil engine till 1960, when the Government acquired the lands.

3. He valued the dam at Rs. 75,000 but claimed only Rs. 40,000. The claimant produced the extracts of the accounts before the Land Acquisition Officer which are produced at exh. 46 to show that the claimant's father alone had constructed the dam. There was hardly anything in the cross-examination of the claimant to discredit his testimony. But he could not give particulars of his claim; and for this purpose he examined Mr. Bodhe, who proved his report exh. 39.

4. Mr. Pratap contended that even the evidence of Mr. Bodhe was not sufficient to justify the compensation of Rs. 40,000 and the learned Judge had not discussed his evidence in the course of his judgment, particularly when Bodhe was cross-examined on the point; and all that he stated was at page 30 as follows:

There was the Government contractor to do something, for the bridge. He had the rates of work. I took them down. I took the difference but the rates of 1961 to 1967. I got the valuation of 1961. I have the rates in my file. I verified the rates of contractor. I cannot tell who was the contractor. I took the rates from him. I reduced the rates by 13/16 per cent, to get the valuation of 1961. I have experience about the valuation of 1961. The calculation made by me is not brought by me in the court today.

5. Mr. Pratap rightly contended that in the absence of the plans, maps and calculation which Mr. Bodhe had made and in the absence of satisfactory reason to support his statement it was wrong on the part of the learned Civil Judge, to accept his statement and award Rs, 40,000 because Rs. 40,000 was less than the estimate of Mr. Bodhe. Apart from the principle governing expert evidence, that it is not conclusive of the matter about which evidence is there, it is well established that expert's evidence or opinion must be founded on good reasons and proper inquiring. Assumed facts with no practical experience of the expert may sometime enable him to dispense with proper inquiry. The principle which should guide the Court in dealing with such evidence were, with respect, minutely laid down, by a Full Bench of this Court, consisting of Mr. Justice Batchelor, Mr. Justice Heaton and Mr. Justice Macleod in Govt. of Bombay v. Merwanji Muncherji : (1908)10BOMLR907 .

6. It was said (p. 913):. We do not lose sight of the decision of the Privy Council in Secretary of State for Foreign Affairs v. Charlesworth, Pilling & Co. (1901) L.R. 28 LA. 121 , where their Lordships point out: '. . .It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had, his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room, for such guesswork; and it would, be very unfair to require an exact exposition of reasons for the conclusions arrived at.' Here however it is not the Court which requires, but the expert Narsimhan who himself propounds what purport to be the precise reasons for his opinion, namely the hypothetical building scheme, Ex. A, on which the land in reference is valued at Rs. 10 per square yard. It is true that the opinion of an expert witness is admissible in evidence not only when it rests on the personal observation and inquiry of the witness himself or on facts within his own knowledge, but also when it is founded on the case as proved by other witnesses at the trial; and, under Section 51 of the Evidence Act, when the opinion is admissible, the grounds upon which it is based are also admissible. But we understand it to be settled law that an expert may not be asked purely speculative hypothetical questions having no foundation in the evidence in other words, before the expert witness is entitled to give evidence on the hypothesis, a sufficient foundation for it must be laid by due evidence aliunde of the facts assumed.

7. In the present case, we find that apart from the guess work made by Mr. Bodhe on the basis of some figures given by the contractor, the claimant had not produced any evidence to show how the rate of 1961 assumed by Mr. Bodhe were correct. The only other witnesses examined by the claimant as already pointed above were the other land holders,, Keki Behramsha Marolia, Kobad Dhanjishah Patel, who said nothing about the calculation of the compensation; but they were examined only to show that with the permission of the claimant they could make use of the road of the dam and the claimant was the owner of the dam for all practical purposes.

8. In the circumstances having agreed with the learned Civil Judge that the claimant was entitled to claim reasonable and fair compensation on account of the acquisition of the dam, we were inclined to remand the case to the trial Court for giving a fair opportunity to the claimant to establish that what he was claiming was just and fair compensation. However, Mr. Porus Mehta, the learned, counsel appearing for the claimant submitted that having regard to the fact that the acquisition was made in 1961 and the case was already pending for over sixteen years, the claimant would give up, his claim for Rs. 40,000 and restrict it to the amount of Rs. 28,052 which was the amount fixed by the expert Mr. Shinde, examined by the Government, as the Deputy Engineer was incharge of the Palghar Division, from January 1961 to April 1962 at the time of the acquisition of the dam.

9. While contending that the method adopted by Mr. Shinde of calculating the cost of the construction of the dam in the year 1935 was contrary to the facts and was also unfair, Mr. Mehta submitted that even then, the claimant would prefer that rather than that the matter should go back to the trial Court for ascertaining the compensation payable to the claimant after calculating properly the same which would be payable as in 1961.

10. Mr. Pratap the learned Assistant Government Pleader, submitted that as the burden of proof lay on the claimant of the land in a reference under the Land Acquisition Act, and the claimant failed to lead proper evidence with regard to the quantum of compensation, it would not be proper for the Court to rely on the evidence led by the Government and award compensation on the basis what the Government expert estimated as the value of the dam. Secondly, he argued that even assuming that the valuation made by Mr. Shinde is accepted by the claimant, it was necessary for the Court to accept his valuation as a whole after providing for a depreciation of Rs. 5,906 and that amount in any event should be deducted from Rs. 28,052.

11. It is true that ordinarily the burden/ of proof lies on the claimant in the reference under the Land Acquisition Act. But no evidence is led by the Government with regard to valuation. We do not find anything improper or illegal if the claimant chooses to rely on their valuation and claims the amount valued by the expert examined on behalf of the Government. As stated above, justice require in this case that the matter should be remanded for a proper consideration of the question of the quantum of compensation particularly because the learned Judge has not even stated in his judgment a single reason as to why he accepted the valuation made by Mr. Bodhe, notwithstanding the non-examination of the contractor, who gave him the rates which were the basis of his valuation.

12. We do not think that there is anything wrong on the part of the claimant if he avoids further litigation and chooses to rely, in the facts and circumstances of the case, on the valuation made by the Government expert Mr. Shinde. Mr. Mehta, has further pointed out that even in the memorandum of appeal in ground No. 32 it is specifically stated that the evidence of the Executive Engineer Shinde should have been accepted. We are, therefore, justified in accepting the suggestion of Mr. Mehta and award compensation on the basis of the statement made by Mr. Shinde amounting to Rs. 28,052.

13. The argument of Mr. Pratap that the amount of depreciation calculated by Mr. Shinde also should be considered as binding on the claimant in the event of the valuation made by Mr. Shinde is being accepted is repelled by Mr. Mehta by pointing that the evidence in the case has clearly established that the dam was constructed in the year 1938 and not in the year 1935 as assumed by Mr. Shinde and even assuming that it was granted in 1935, the proper estimate of the valuation should have been made on the basis of the value of the replacement of the dam as in the year 1961 and not 1935.

14. Mr. Mehta also contended that under the agreement itself it was the duty of the claimant to spend for the repairs and maintenance of the dam which was not even taken into consideration by Mr. Shinde. Hie also contended relying on the admission of Mr. Shinde, quoted above, that there would be a change in his calculation if the dam was built not in the year 1935, and life of the dam was sixty years and having regard to all these facts if would be unfair to allow depreciation to the extent of Rs. 5,906.

15. Mr. Pratap then contended that it would be wrong in principle to award compensation on the valuation of the dam itself as made by Mr. Shinde as the dam absolutely belonged to the Government and the claimant was merely a licensee. The argument of Mr. Pratap must be rejected as it is against the well settled principles of valuation of such property. Thus, in Ryde on Rating, thirteenth edn., 1976, it is said (p. 509):

Where property is of a kind that is rarely let from year to year, recourse is sometimes had to interest on capital value, or on the actual cost, of land and buildings, as a guide to the ascertainment of annual value.

16. It is also observed in this authority that reference to the cost of construction was adopted for the purposes of the valuation of the indirectly productive portions of water and other utility undertakings. It is further observed that the principle of valuation has been used on occasion for the valuation of municipal property, such as a town hall, a fire station, a swimming pool, public conveniences, a crematorium by itself and with a cemetery, a teachers' training college, and an airport, of colleges and university buildings, public schools, a geological museum, an |old people's home, plant and machinery, football stadia, cricket ground, industrial premises and poultry broiler houses and an indoor bowling stadium. It is also apparently applied to holiday camps. (See pp. 512 and 513).

17. In Hari Chand v. Secy. of State AIR 19391 P.C. 235 : 42 Bom. L.R. 138 where the question related to compensation for the acquisition of certain bungalows in the Peshawar Cantonment which belonged exclusively to the Government and the claimants were given permission to build on terms which were precarious, merely that at any time the Government may resume the premises on giving one month's notice, Lord Macmillan said (p. 237):.In the present instance the subject-matter of valuation or compensation being the buildings and not the site, inasmuch as the site was already the property of the Government, the question is what was the appropriate method of valuing the buildings. It was made a matter of complaint that in consequence of the resumption notice having been served the value of all these buildings, some of them no doubt attractive residences, had been seriously depreciated. Their Lordships could have appreciated that criticism if the principle of valuation adopted had been that of proceeding upon the rental value of the buildings, but in the present case the method adopted has been what: is commonly known as the contractor's method. The subject to be valued being a building apart from the site the principle of fixing value by ascertaining the costs of reproducing the building at the present tune and then allowing for depreciation in consideration of -the age of the building and for the cost of such repairs as might be required apart from depreciation, is quite a well-known and recognized method of valuing buildings for the purpose of compensation. That method was pursued here and that method is not, as their Lordships conceive it, affected by the resumption notice because the prices which would be taken and were taken in this case for the purpose of ascertaining the cost of reproducing the building would not be affected by the resumption notice at all. The buildings accordingly in their Lordships' view have been valued for the purpose of compensation on a perfectly admissible and perfectly legitimate principle, and that being so, there would appear to be no valid objection on this score to the awards that were made.

18. The principle was further reiterated by the Privy Council in the case of Secretary of State v. Sri Narain Khanna : (1942)44BOMLR788 , P.C..

19. It may be noted that the Manual of Land Acquisition for State of Maharashtra, Revised Edition, 1973, has relied on the aforesaid Privy Council decision in Hari Chand's case and has laid down in para. 196 as follows (p. 130):

When A.O. has come to a decision, that built-over property cannot be valued on the basis of its rent-fetching capacity, only way left for him would, be to find out market value of land as an open site and add to it the depreciated value of the building standing thereon, considering its condition, maintenance etc.

In order to find out the depreciated value of a bulling it is necessary to find out first what such building would cost to build on the relevant date of valuation. This will have to be done by reference to the rates of construction for the particular type of building current at the date of section 4 notification. Having determined this, next job would be to find out the depreciation factor. It is a well-known fact that value of any building goes on depreciating on account of age, obsolesence, changes in tastes and fashion, economic conditions of the people in general and so on. The depreciation would also depend upon standard of maintenance. A building, repaired annually, well-maintained by regular colouring etc. would not depreciate in value that much as compared to a building allowed to deteriorate, without any repairs and other maintenance. Another important factor to be borne in mind is that depreciation in case of buildings is not uniform over its entire life as is generally the case with machinery. It is therefore difficult to ascertain the depreciation in case of buildings. In case of new constructions of fairly good quality, depreciation would almost be negligible for the first 5 to 10 years. A formula therefore based, upon future life and full life of a building is in vogue which gives the results fairly correctly. Depreciated value is given by dividing Years Purchase for future life of building by Year's Purchase for full life of building (considering class of building, materials of construction etc.) and multiplying the cost of building by this factor. This formula, it must be remembered, takes care of good maintenance etc., since it is possible to lengthen the future life of buildings by regular and good, maintenance.

20. We find that Mr. Shinde has not followed these principles in calculating the depreciation. In the report which he has submitted at exb. 55, he has not specified how he has calculated depreciation of the dam at Rs. 5,906. Though he has Staid that the life of the dam was sixty years though its present age was twenty-six years and he had made the calculations of the cost of the construction of the year 1935.

21. There is no reason whatsoever to doubt the calculation of the construction of the dam made by him as he was in the service of the Government as Deputy Engineer from 1954 to 1962 and was an Executive Engineer till 1963 and he had also considerable experience as a supervisor of supervising and estimating the other work till 1964. He also claimed to have designed and supervised the construction of the bridges. He admitted that the dam was three or four miles away from the high-way and skilled labourers were not available on the spot and a mason would be necessary for construction the dam must have been brought from outside.

22. There is, also considerable evidence led by the claimant of the neighbouring landlords that the dam was used as a bridge by the villagers and it was kept in good condition for the use of the villagers with the permission of the claimant. The claimant himself has stated on oath that the dam-cum-bridge was built to cross the river and to store the water. One of the conditions of the claimant was to spend for the maintenance of the bridge was already stated above.

23. Having regard to the general principles it would be the duty of the Court to take into consideration the cost of replacement of the dam in the year 1961 as well as the cost of the maintenance of the dam. Mr. Shinde when allowing depreciation as already stated has not borne these principles in mind. He calculated the cost of construction as in 1935 at Rs. 28,052. Even assuming that the depreciation is to be allowed the cost of replacement of the bridge in 1961 would certainly be very much higher than Rs. 28,052 than the amount of Rs. 5,906.

24. In these circumstances we are inclined to hold that the claimant cannot be said to be unreasonable in demanding compensation at the rate of Rs. 28,052 which was the cost of construction according to the valuation made by Mr. Shinde, in the year 1935. The arguments of Mr. Pratap for deducting Rs. 5,906 therefrom must be therefore rejected.

25. The learned Civil Judge, while rightly awarding solatium at 15 per cent, under Section 23(2) has passed an order ignoring the provisions of Sections 28 and 34 of the Land Acquisition Act, 1894, under which interest has to be paid by the Collector at the rate of 4 per cent, per annum from the time of taking possession until the payment is made. The learned Civil Judge, awarded interest at 4 per cent, per year from the date of the award i.e. October 25, 1966, which in our opinion was inconsistent with the provisions contained in Sections 28 and 34 of the Land Acquisition Act, 1894.

26. Mr. Mehta submitted that although the cross-objections are not filed by the claimant in this case, as there was an; order for compensation for Rs. 40,000 with the solatium and interest the ends of justice and the provisions of law contained in Section 34 of the Land Acquisition: Act, 1894, require that the Court should exercise its power under Order XLI, Rule 33 of the Code of Civil Procedure, 1908.

27. Mr. Pratap found it impossible to justify the order of the learned Civil Judge in restricting interest only from the date of the award, having regard to the provisions of Section 34 of the Land Acquisition Act, 1894 which cast a duty on the Collector to deposit the compensation before taking possession of the land. But he submitted that as it is not possible to ascertain the date on which possession was taken from the record, what should be directed is that interest should be awarded at 4 per cent, from the date on which possession of the dam was taken by the Government.

28. Mr. Mehta, however, submitted that as possession of all the surrounding lands was taken on March 24, 1961 and March 27, 1961, interest ought to have been awarded from March 27, 1961 as that must be considered to be the date on which the Collector took possession of the land. In all the facts and circumstances of the case, we are inclined to accept the submission of Mr. Mehta and hold that the possession of the dam must be deemed to have been taken by the Collector for the purpose of payment of interest under Section 34 on March 27, 1961.

29. In the result, for the order passed by the learned Civil Judge, Senior Division, 'Thana, on November 29, 1968, the following orders have been substituted.

30. The Government shall pay to the claimant Rs. 28,052 as and by way of compensation for the dam-cum-bridge on account of its acquisition by the Government, the Government shall further pay solatium at 15 per cent, on the said sum under Section 23(2) in consideration of the compulsory nature of the acquisition. The Government shall also further pay on the said amount of compensation and solatium interest at the rate of 4 per cent, from March 27, 1961, (the date on which the possession of the dam was taken) till the date of payment.

31. The Government should also pay proportionate costs of this appeal and of the proceedings in the trial Court, the proportion being determined with reference to the ratio between Rs. 28,052 which is awarded as compensation and Rs. 40,000 which -was claimed by the respondent.

32. Subject to what is stated above, the appeal is allowed.


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